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WOLF BLITZER, CNN ANCHOR: Happening now: We're hearing from members of a Virginia family that played host to a very unusual house guest today, the president of the United States.

A hero of the Tea Party movement shocks Washington by announcing he's about to leave the United States Senate. Senator Jim DeMint joins us live this hour. We will talk about his decision and new job.

And new indications Syria's civil war is in a very dangerous, perhaps decisive tipping point right now. Can the world prevent Bashar al- Assad from using chemical weapons against his own people?

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

We begin with President Obama taking his battle to extend tax cuts for the middle class into the heart of a middle class suburb today. He visited a family just outside Washington, D.C., using their story to dramatize what will happen in just 26 days if he and Congress can't make a deal on the so-called fiscal cliff, a source of great concern for so many people.

Everyone's taxes will go up, will go up if there's no deal.

Let's go live to our White House correspondent, Dan Lothian. He's on the scene for us over at the White House.

How did it go, Dan?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, we have seen the president do this before in the past whenever he's locked in negotiations with lawmakers.

He heads out on the road, either goes to a backyard or sits down around a dinner table to really put pressure on Congress. That's what he did today when he went to Falls Church sitting down with the Santana family. The wife is a schoolteacher. The husband works at a local car dealership. Their parents, who also are employed, live in the household with them.

So if taxes do go up on middle class Americans, the overall hit on that household will be $4,000. So they're very concerned, but they were also quite happy today. They said it isn't every day that the president comes by and hangs out at your house. But the message the president was trying to drive home today was aimed directly at Congress and he was using this backdrop to tell a personal story.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: For them to be burdened unnecessarily because Democrats and Republicans aren't coming together to solve this problem gives you a sense of the costs involved in very personal terms. Obviously, it would also have an impact on our economy because if this family has a couple thousand dollars less to spend, that translates to $200 billion of less consumer spending next year.

(END VIDEO CLIP)

LOTHIAN: Now, the president said that this is a solvable problem. He remains optimistic. He says that there needs to be some certainty for families who are concerned about their taxes going up, for businesses who are making plans about whether they will add investments or add employees in 2013, so he's pushing Congress to act, Wolf.

But I can tell you that Republicans simply are not seeing eye-to-eye with the president. They also don't want to budge, don't believe the taxes should go up even on the wealthiest of Americans, Wolf.

BLITZER: I know they had a phone call a phone conversation yesterday, the president and House speaker, John Boehner. Has there been any follow-up that we know of? Are they talking on the phone? Are they gearing up for an actual meeting? John Boehner staying in town while this crisis continues.

LOTHIAN: That's right, Wolf. He is. And we are told that no additional calls, no further discussions that we are aware of. There was that call, and that came after a lot of criticism on the White House that the president was not negotiating face-to-face with John Boehner.

But what we're seeing here is this strategy that the president has employed before, where instead of sitting down with Republicans, he takes his message outside of sort of inside the Beltway or brings people to the White House. You have seen him sitting down with middle class Americans, also bringing CEOs and small business owners here to the White House. That's what he is using to put pressure on Congress to get a deal.

BLITZER: Yes. Let's see if he invites the speaker to come over to the White House and put some pressure on him.

LOTHIAN: That's right.

BLITZER: See if they can -- what they can do, because, as we all know, that clock is ticking. Dan Lothian, thanks.

Let's dig a little bit deeper right now with our chief political analyst, Gloria Borger.

Some interesting numbers in a Quinnipiac University poll. Who will make a good-faith effort to cooperate with the other side, act in good faith? And 56 percent thought Obama and the Democrats would. Only 43 percent thought the Republicans would. Will the president not act in good faith? And 38 percent thought president wouldn't act in good faith; 51 percent thought Republicans wouldn't act in good faith.

But if there's no deal and the country goes over that fiscal cliff, taxes go up for everyone, mandatory spending cuts go into effect, a lot of folks are going to say, where was the president? He was just reelected. Why couldn't he put together a package, a deal to avoid this disaster?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: I think this is a question of political leadership. And as that poll showed, there's no doubt that the president has the political advantage going into this.

But at some point, and I think we're kind of getting close to it, the president has to be able to pivot and to say how do I turn this political advantage into a real policy accomplishment? And, Wolf, I don't think you're going to do that with continued campaign-style events like we just saw, meeting with middle class families.

OK. We get that. That occurred during the campaign. The White House has clearly gotten its message out. I think now there has to be a next step. You know, timing is everything in politics. And this is absolutely no different.

What I'm getting from talking to some Democrats on the Hill is I think there's actually a lot of pent-up anger and frustration among Democrats how they feel Republicans were obstructionist for the last four years. There's a little bit of payback going on here. They have got the advantage. Their message is getting through. People believe they're on their side.

They're going to let this play out a little bit, but you're right. At a certain point, the president has to be president and lead so people don't go over the cliff.

BLITZER: Yes. I think it's clear based on everything I'm seeing out there, the American public is getting increasingly frustrated.

BORGER: Oh, they are getting frustrated.

I want to play something for you. There was a focus group done by Democratic pollster Peter Hart. He took 12 suburban Milwaukee women, some of whom voted for the president, some of whom voted for Mitt Romney, and he asked them what they thought about the fiscal cliff. Take a look.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I would tell them to sharpen your pencils and get over yourselves.

UNIDENTIFIED FEMALE: Be realistic and stop being political.

UNIDENTIFIED FEMALE: I think they're all at fault because they're not getting together. Don't be Democrats, don't be Republicans. They're American citizens. Work together to get the work done.

(END VIDEO CLIP)

BORGER: So that's the clear message, Wolf. You understand there was a huge gender gap for Democrats in this last election. Republicans have to look at that and say, OK, we do have to get something done. But let me add this. When Peter Hart actually kind of laid out on the table here are the choices you have to make on spending and here are the choices you have to make on taxes, they had a little bit more difficult time in deciding what to do. So they began to realize the extent of the difficulty in cutting any real deal.

BLITZER: Yes, not belittling the difficulty. These are tough, tough issues.

BORGER: No. Right.

BLITZER: But the stakes obviously are really, really important right now. There is a little wiggle room...

BORGER: Yes.

BLITZER: ... as far as the president and the Democrats are concerned when it comes to raising tax rates for the wealthy.

BORGER: Sure. The president's been very careful not to say we have to go up to the Clinton-era 39.6 percent. He hasn't used that number. And so he's...

(CROSSTALK)

BLITZER: Right now, it's 35 percent.

BORGER: Right now, it's 35 percent. So if you sort of look in the middle, OK, 37 percent is a real possibility. But here's the caveat.

John Boehner, the House speaker, cannot take a rate increase to his caucus unless it is accompanied by some signal of real entitlement cuts, something that they do now and give a down payment on for the future. I don't think you get could get rates through unless the president gave a little bit.

And if you look at the document from the grand bargain back in July of 2011, the president was willing to give on that. So we will have to see if they can get back to that. But, again, it has to be one significant item that they know they will be able to build upon in the future, an item from both sides.

BLITZER: Neither side's going to be thrilled, but they have got to compromise. That's the bottom line.

BORGER: Right. That's the way life usually works, doesn't it?

BLITZER: Certainly does. It certainly does. Thank you.

Meanwhile, a huge announcement today on Capitol Hill. The conservative Senator Jim DeMint of South Carolina is resigning to take a new job. He's here in THE SITUATION ROOM live. Later this hour, he will explain what's going on.

Also later, new warnings that the U.S. should be prepared to intervene in Syria's civil war. Senator John McCain now says he's deeply disturbed by the latest reports that the current regime in Damascus is preparing to use chemical weapons against its own people.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: These reports may mean that the United States and our allies are facing the prospect of an imminent use of weapons of mass destruction.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Syria's rebels say they're closer and closer to toppling the government, but soon they could face a weapon even deadlier than any they have seen so far.

CNN's Pentagon correspondent Barbara Starr is joining us now with the latest new threat coming from the Damascus regime.

Update on the possible use, Barbara, of chemical weapons.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Wolf, the challenge right now is for the Obama administration to figure out exactly what Bashar al-Assad is up to with his deadly arsenal.

(BEGIN VIDEOTAPE)

STARR (voice-over): The horror remains unspeakable; 25 years ago, Saddam Hussein unleashed one of the worst poison gas attacks in history. In the town of Halabja, thousands were killed. Now, in Syria, U.S. concerns are growing by the hour that Bashar al-Assad may be planning the same thing against his citizens.

LEON PANETTA, U.S. DEFENSE SECRETARY: The intelligence that we have raises serious concerns that this is being considered.

STARR: U.S. intelligence shows Syria has mixed chemical compounds needed to make sarin gas, a deadly agent that can quickly kill thousands.

MCCAIN: The United States and our allies are facing the prospect of an imminent use of weapons of mass destruction in Syria. And this may be the last warning we get.

STARR: The U.S. is not precisely saying what the Syrians are doing, but there are two ways of mixing elements to make a sarin-filled weapon.

LEONARD SPECTOR, MONTEREY INSTITUTE OF INTERNATIONAL STUDIES: You have to handle it very, very carefully, because a drop will kill you. Often, this will be done at the last minute. Or that's one style.

STARR: There's another way to do it. Two chemicals are placed in an artillery shell separated by a disk. When the shell is fired, the disk explodes, the chemicals mix, becoming deadly sarin. But at some point, the chemicals are on the move.

SPECTOR: Then they have to decide to move it to the place where the delivery system sits. So, it may be artillery pieces in an artillery battery of some kind. It could be an airport or military air base, where the bombers are sitting.

STARR: That may be the final opportunity to strike before chemical weapons are used.

MCCAIN: Time for talking about what to do may now be coming to a close. And we may instead be left with an awful and very difficult decision.

(END VIDEOTAPE)

STARR: Now, deadly sarin gas when stored properly, we are told, does have a shelf life of several weeks. So if these tensions, Wolf, could be at the forefront for some time to come until there's a clear picture of what the Syrians are up to or the U.S. or one of the allies decides to do something about it -- Wolf.

BLITZER: Barbara, thank you.

The White House is closely watching the crisis in Syria. And there's a growing sense of dread there. So it's absolutely no surprise that Syria came up repeatedly during Secretary of State Hillary Clinton's trip to Ireland.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS SECRETARY: Wolf, there's a new press for diplomacy on Syria with the secretary here in Europe.

(voice-over): As concern mounts that Syrian President Bashar al Assad might use chemical weapons, Secretary of State Hillary Clinton makes a new diplomatic push to end the conflict in Syria.

HILLARY CLINTON, U.S. SECRETARY OF STATE: Events on the ground in Syria are accelerating. And we see that in many different ways. The pressure against the regime in and around Damascus seems to be increasing.

DOUGHERTY: In Dublin for a security conference, Clinton met twice with Russian foreign minister Sergey Lavrov. In their one-on-one meeting, discussing one thing they agree on, the need to set a red line for the use or the loss of control over Syria's chemical weapons.

The second meeting held behind closed doors at the Russian delegation's insistence included U.S. special envoy on Syria Lakhdar Brahimi. The envoy saying he wanted to work out a process that will get Syria back from the brink.

So far, Moscow has blocked action of President Assad at the United Nations, insisting there should be no regime change. But diplomats now say Moscow increasingly doubts Assad can survive in power, as the armed opposition gains ground.

Some U.S. senators say now is the time for Russia to act.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: This is an opportunity for Russia to show the international community at large that you can be a constructive force at a time of great need. And you have a unique capability as a nation to do some good.

DOUGHERTY: For the U.S., the insurgents' gains are a double-edged sword. Some of the most ruthlessly affected fighters also are the most radicalized. And Washington is moving to declare one of those groups, the al-Nusra front, a terrorist organization.

But the Obama administration worries that the stronger radical fighters become, the more armed combat, not political efforts to find a solution will decide the outcome in Syria.

(on camera): Early next week, Secretary Clinton travels to Marrakesh, Morocco, for a meeting of the so-called Friends of Syria group. The focus will be on the opposition with the Obama administration taking the first steps towards officially recognizing them.

Jill Dougherty, CNN, Dublin.

(END VIDEOTAPE)

BLITZER: We're just a few minutes away from speaking with Senator Jim DeMint of South Carolina. He's here live in THE SITUATION. He will explain his stunning decision today to resign from the Senate.

(COMMERCIAL BREAK)

BLITZER: Let's get the latest on that New York subway death that became infamous by a haunting newspaper photo.

Lisa Sylvester is monitoring that and some other top stories in THE SITUATION ROOM right now.

What's the latest, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Wolf, the suspect in the subway pushing death was arraigned and charged with second-degree murder. The 30-year-old homeless man, Naeem Davis, is being held without bail until he appears in court again Tuesday. A photo that appeared on the front page of "The New York Post" saw Ki-Suk Han him trying to claw his way back onto a New York subway platform after he was shoved on to the tracks. Seconds later, the oncoming subway train struck and killed him. And the U.S. Navy is moving warships to monitor the potential North Korean launch of a long-range ballistic missile. The USS Benfold and USS Fitzgerald, both guided missile destroyers are being moved into positions. Two other warships might join them.

North Korea says it plans to launch a rocket between December 10th and 22nd. It claims the rocket is for science and research.

And New Jersey Governor Chris Christie is in Washington today to talk about hurricane Sandy relief. The Republican governor met with President Obama, House Speaker John Boehner and other officials. The Christie-Obama relationship was in the spotlight right before the election when the two showed a unified front in the wake of that storm.

And the royal baby watch, it is on. There you see a pregnant and smiling Catherine, duchess of Cambridge, left a London hospital earlier today. She was admitted on Monday for acute morning sickness.

The palace says Catherine will head to Kensington Palace for a period of rest. Prince Charles says he is thrilled he's going to become a grandfather. And the baby will be the next in line to the throne after Prince William and actually after Prince Charles as well. So there's a little bit of a cue there.

BLITZER: Third in line.

SYLVESTER: Third in line.

BLITZER: Rather it's a boy or girl.

SYLVESTER: Yes, but it's really exciting. I don't think there's anybody out there, you know, they've been kind of waiting and hoping and now, we've seen she's actually pregnant and with child.

BLITZER: They still call her Catherine. No more Kate.

SYLVESTER: Yes, no more Kate. And no more Kate Middleton.

BLITZER: Yes, Catherine, the duchess.

SYLVESTER: She's the duchess now. Right.

BLITZER: Good to be with you. Thank you.

One of the most conservative members of the United States Senate, I think it's fair to say he shocked Washington today, the Tea Party favorite Senator Jim DeMint of South Carolina, he's standing by live. He's here in THE SITUATION ROOM. He's getting ready to explain why he's resigning from the Senate less than halfway through his second term.

(COMMERCIAL BREAK)

BLITZER: A bombshell announcement today up on Capitol Hill. Senator Jim DeMint of South Carolina, certainly a great champion of the Tea Party movement, announced he's leaving the Senate to become the president of one of Washington's most influential conservative think tank organizations, the Heritage Foundation.

The senator is standing by to join us live here in THE SITUATION ROOM in just a moment.

Well, Senator DeMint had always said that he was going to limit himself to two terms in the Senate. But he's not even halfway through his second term now and he's saying he's going to leave in January with almost four years left.

And I'm told that he didn't tell his staff about his decision to leave until this morning, right before it was made public. But he said this was an offer to go to this conservative think tank that he couldn't pass up.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Mr. Senator --

BASH (voice-over): Jim DeMint's announcement that he's leaving the Senate was a stunner.

SEN. JIM DEMINT (R), SOUTH CAROLINA: I honestly believe I can do a lot more on the outside than I can on the inside.

BASH: The anti-government, anti-tax conservative crusader certainly made a mark on the inside. On the Senate floor, a frequent voice of objection against legislation backed by both parties.

UNIDENTIFIED MALE: Is there any objection?

DEMINT: Mr. President, I object.

BASH: Just this week, he helped block a disabilities treaty opposed by many conservatives and he was one of House Speaker John Boehner's loudest conservative critics for a fiscal cliff proposal with $800 billion in tax increases.

DEMINT: Republicans should not be conceding that the federal government needs more money, negotiating with ourselves.

BASH: DeMint really made a name for himself in recent years as a Tea Party kingmaker, raising millions to help elect half a dozen like- minded conservatives to the Senate -- Marco Rubio, Rand Paul, Mike Lee, Pat Toomey, Ron Johnson and Ted Cruz. DEMINT: I've played a role in stocking the Senate with solid conservatives who are younger and brighter and better spokesmen than I am. And so, I know I'm leaving the Senate better than I found it.

BASH: But DeMint also infuriated Republican leaders by backing several GOP primary candidates who could not win their Senate seats. Remember Christine O'Donnell?

CHRISTINE O'DONNELL (R), FORMER SENATORIAL CANDIDATE: I'm not a witch.

BASH: CNN is told Senate Republican Leader Mitch McConnell was very annoyed with DeMint for backing O'Donnell and a couple other losing candidates in 2010, and cost Republicans the majority. At the time, DeMint told us he was unapologetic and still is.

(on camera): You're trying to send a message to the GOP establishment.

DEMINT: The GOP establishment is out. And what we're going to do is help the American people take back their government.

BASH: In the flood of GOP reaction to DeMint's surprise retirement, you didn't have to read between the lines much in the GOP leader's three-sentence statement to see some hard feelings -- thanking DeMint for his, quote, "uncompromising service." Another shocker, one of the biggest compliments came from the Democratic leader who called DeMint a friend.

SEN. HARRY REID (D-NV), MAJORITY LEADER: I've always liked the guy. And even though I disagree with so much of what he's done, I appreciate that -- I personally believe he does this out of a sense of real belief. It's not political posturing for him as it is for a lot of people. So I like Jim DeMint. I wish him well.

(END VIDEO CLIP)

BASH: Now, Wolf, remember Jim DeMint is one of the most conservative senators who worked very, very hard to block many pieces of legislation that the Democratic leader Harry Reid was trying to pass through the Senate.

And DeMint made a point of personally going over to Harry Reid's office to tell him face-to-face that he decided to resign. I can tell you as an observer of the senate watching relationships deteriorate this was surprising, but a good surprise.

BLITZER: Leaving on a good note at least with the majority leader in the Senate. Dana, thanks very much.

And I'm joined now by Senator DeMint along with Heritage Foundation founding trustee, the current president -- shall we say the outgoing president? -- Edwin Feulner. Thanks very much for coming in as well.

We're going to talk a little bit about the state of the Heritage Foundation and the state of the Republican Party, but the senator is here, the news maker. You shocked all of us. Why did you do this?

SEN. JIM DEMINT, R-SOUTH CAROLINA: Wolf, after this last election, it's apparent that we need to do more as conservatives to convince Americans that our ideas and our policies are going to make their lives better.

The Heritage Foundation is the premier think tank, research organization, the premier idea group for the conservative movement. This will give me the opportunity to help take our case to the American people and to translate our policies into real ideas at the --

(CROSSTALK)

BLITZER: So, you think you could be more influential within the conservative movement as the leader of the Heritage Foundation as opposed to a United States senator?

DEMINT: There's no question about it. I've --

BLITZER: What does that say about the Senate, though? I thought being a senator, one of only 100, you had a real -- you had enormous power.

DEMINT: Well, we do, and I think I've had a lot to do with changing the Senate and bringing in some folks who better reflect America into the Republican Party.

But for me, particularly since I spent most of my life doing research, working with ideas and marketing, and trying to sell those to people all over the country, this is like coming home, to be able to work with people who are like-minded at Heritage and all over the country.

BLITZER: If Romney would have won, do you think you would have also made the same decision?

DEMINT: I would have thought differently about it, but this -- I told Ed four years ago, half jokingly, that when people ask me to run for president, I said the only president I want to be is president of the Heritage Foundation, because they're about ideas and their ideas are backed up by solid research.

And Wolf, the thing that breaks my heart is as Republicans, we're not doing a good job of convincing Americans that we care about every one of them, and that our policies are going to make their lives better.

BLITZER: The impression is you only care about the rich.

DEMINT: That's the impression. I'm a conservative first, and I believe that if we do a better job of helping Americans understand what we're trying to do, to showcase every place in the country that our ideas are working at the state level, that that'll help those at the federal level who want to carry those policies.

And frankly, if independents and Democrats want to work with us on conservative ideas, I can do that better at Heritage than as a part of some inside the Senate --

BLITZER: Ed, you've been at Heritage forever, right?

(CROSSTALK)

EDWIN J. FEULNER, PRESIDENT AND FOUNDING TRUSTEE, THE HERITAGE FOUNDATION: I have been, 35 years.

BLITZER: You know the organization. I didn't realize that based on how powerful he says he's going to be within the conservative movement. Do you feel like you've been that powerful --

FEULNER: Wasn't it great? We are an idea factory, and ideas are the raw materials of what goes on in Washington, and if we can pull together a stronger coalition, Republican, Democrat, conservative, even some liberals sometimes on the broad issues that face us, man.

And Jim DeMint knows how to do it. He knows the marketing side as well as the issue side. It's going to be an exciting time at Heritage.

BLITZER: It's a big job, and it's not just thinking. You've got to raise money, you've got to go out there and speak, you've got a big staff, you've got a lot of work to do.

FEULNER: He does. He's got to administer 250 people. We've got 600,000 members around the country who are going to be really ecstatic when they hear the news of Jim's coming in. It's an exciting time at Heritage.

BLITZER: Not everyone is upset that you're leaving the United States Senate.

(LAUGHTER)

BLITZER: I'll play a little clip. The minority leader in the House of Representatives, Nancy Pelosi.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI, D-CA, MINORITY LEADER: For them to slap the face of our veterans, of people with disabilities, of families with children with disabilities, that was one of the saddest days. So, anyone who was a party to that, well, I wish them well wherever they are going and hope that we can have more of our values represented there.

(END VIDEO CLIP)

BLITZER: She was referring to your nay vote, your vote against this international treaty to help people with disabilities all over the world. You were a bunch -- there were a bunch of Republicans who voted against it, even though John McCain and Bob Dole and others came and pleaded with you to vote for this treaty.

DEMINT: Wolf, the issues -- the rights and privileges, the opportunities for the disabled are very important. They're too important to turn over to the --

(CROSSTALK)

BLITZER: So, why did you vote against this treaty?

DEMINT: If it's important, why turn it over to the United Nations? There's nothing that they're doing effectively.

BLITZER: Senator Kerry says they're not turning it over. There's -- the United Nations is just the body that's going to help other countries do what we are doing here in the United States.

DEMINT: Well, if that were true, we don't need a legally-binding treaty. We can work as an international community to spread our ideas abroad. But America has set the standard for our treatment of the disabled in creating opportunities and removing obstacles. The United --

BLITZER: On this issue, even Senator McCain and Senator Dole, you say they are wrong.

DEMINT: They are wrong because the United Nations cannot take an issue of that importance and carry it effectively around the world. This is the group that wants to make Palestine a state, they're the group that wants to regulate the internet.

Wolf, if you look behind the scenes of the United Nations, this is not something that we want to turn over the rights and opportunities for the disabled to.

BLITZER: So, this was more of an expression of your disdain for the United Nations than it was necessarily the merits of the treaty?

DEMINT: Well, the -- there was a small part related clearly to the disabled, but it was under well over 100 pages of treaty of legal language that affects parental rights in other issues that are important. That's why --

BLITZER: Ed, are you with him on this, or are you with --

FEULNER: Yes.

BLITZER: -- Bob Dole?

FEULNER: No. Absolutely we're with him. We did some of the early background on it. Our guy Steve Groves was writing papers on this weeks and weeks ago, and we're very surprised also, frankly, that the Senate would bring it up in a lame duck session. This is something that needs full and considered --

BLITZER: They're going to bring it up again next year.

DEMINT: They might.

BLITZER: You won't be there, but they'll bring it up again next year.

DEMINT: They can bring it up, and we'll take the --

(CROSSTALK)

BLITZER: Should there be a compromise in order to avoid going over the fiscal cliff? John Boehner's already ready for $800 billion in increased tax revenue, not necessarily raising the marginal tax rate, on the wealthy, but capping deductions, eliminating loopholes. Are you with the speaker of the House on that?

DEMINT: Well, unfortunately, Wolf, the policies of President Obama have already taken us over the cliff. If you meet with businesses like I do all the time, they've already pared back their plans and their hiring for next year, anticipating what's going to happen.

So, we can fix this Christmas Eve if we want, but we've already hurt the economy and hurt job growth in the country.

BLITZER: Are you with Boehner?

DEMINT: I'm not with Boehner, because this government doesn't need any more money. This country needs less government. We are going to have historic levels of revenue to the government this year, but we've doubled spending in the last ten years.

BLITZER: Everyone's taxes are going to go up at the end of the year if there's no deal.

DEMINT: Well, I've -- we have already offered to extend current tax rates, that's what we should have done six months ago until we could com to some agreement, some compromise on tax reform.

BLITZER: When you say compromise, where are you ready to compromise as far as taxes are concerned?

DEMINT: Well, how we go about tax reform, there's a lot of room to work together to lower the rates --

(CROSSTALK)

BLITZER: Give me an example. One example.

DEMINT: I'm not sure where the Democrats are, because they have not offered a plan.

BLITZER: They say -- well, their plan is keep the tax rates, the Bush tax rates from 2001, 2003 forever, make them permanent. The top 2 percent, let them go from 35 percent to 39.6 percent, which is what it was during the Clinton administration.

DEMINT: But it's incredible to me we're even talking about it, because that doesn't solve the problem --

BLITZER: It doesn't solve it, but it's a beginning.

DEMINT: It runs the government for five or six days.

BLITZER: But it's a beginning. Every -- a billion here, a billion there. It winds up being real money.

DEMINT: But the president has known about this so-called cliff for over a year and has yet to present a plan that's comprehensive that actually reduces our deficit.

So, I'm willing to work with anyone who is willing to put a plan on the table, but our party or anyone should not sit down and negotiate with someone who would not put a plan on the table. And the president has not put a serious plan on.

BLITZER: So -- and Ed, I want you to weigh in, because we're running out of time.

FEULNER: Sure, OK.

BLITZER: But as far as a compromise on the marginal tax rate, 35 percent going up, let's say 36 or 37 percent, is that acceptable?

FEULNER: No. No. Because marginal tax rate increases, if there is any increase in revenue, it just gives them more to play with over on Capitol Hill and more to spend.

And when we talk about fairness, when the top 2 percent, $250,000 and above, are already paying 45 percent of total income tax, that's a big question of fairness there, too.

BLITZER: Who should Nikki Haley name to replace you?

DEMINT: I talked to her today, and she and I share the same philosophy, the conservative philosophy. I told her I trust her decision and I'm not going to push her one way or another.

BLITZER: A lot of speculation Congressman Tim Scott?

DEMINT: He's a wonderful person. Our whole delegation is really strong as Republicans, so she's got a tough choice to make, but I'm convinced she'll give me someone as good or better than I am I can pass the torch to. And I'm honored to have Ed Feulner pass the torch at the premier conservative organization in the country.

BLITZER: Senator DeMint, we'll have you back as the president of the Heritage Foundation in the weeks and months, years to come, thanks very much.

DEMINT: I hope so.

BLITZER: Ed Feulner, what happens? You just going to be retired? What are you --

FEULNER: Oh, no. No, no. I'll still be hanging out at Heritage in a part-time basis and --

BLITZER: Giving advice?

FEULNER: Giving you some free advice, too, over here, Wolf. I hope --

(CROSSTALK)

BLTIZER: You're going to give him some advice to --

FEULNER: I hope you'll have me back.

BLITZER: Ed, thanks so much for joining us.

FEULNER: Thanks.

DEMINT: Thank you, Wolf.

BLITZER: Up next, our "Strategy Session." We're going to look ahead to a Senate without Jim DeMint and whether some Republicans will side with President Obama in this fight over raising taxes on the rich.

(COMMERCIAL BREAK)

BLITZER: Let's discuss what we just heard in our "Strategy Session." Joining us three CNN contributors, the Democratic strategist Donna Brazile, Erick Erickson, he is the editor-in-chief of the conservative blog redstate.com, and David Frum, a former Bush White House speech writer now contributing editor at the "Daily Beast" and "Newsweek."

Guys, thanks very much. Erick, you know Jim DeMint. Were you surprised by his announcement today?

ERICK ERICKSON, CNN CONTRIBUTOR: You know, I got a phone call before the announcement went out. Yes, I was surprised but not really. Ever since I've known Jim DeMint, he said the only other job he'd like to have is the presidency of the Heritage Foundation.

An opportunity like that only comes along one time. So it really is an interesting torch-passing moment, Wolf. When you think about it, most of the up and coming generation of Republican leaders were not even in high school when Ronald Reagan was president.

And now one of the standard bears of the Reagan revolution is retiring and beginning to pass the torch. You don't see that very often.

BLITZER: David, is this a loss for conservatives in the Senate? DAVID FRUM, CNN CONTRIBUTOR: It is a -- I think a gain for the effectiveness of the Republican Party in the Senate. It will be a more unified caucus.

BLITZER: Because he was so to the right, is that what you're saying?

FRUM: The reason there's so little good will between him and Mitch McConnell is in the last cycle Jim DeMint reached into Mitch McConnell's own state of Kentucky where Mitch McConnell had a handpicked junior senator, Tray Grayson.

And Jim DeMint said I want my guy, Rand Paul, and fought McConnell in his own state and beat him. That was a demonstration of the balance of power in the Senate. And I think it left a lot of ill will behind as we saw today in that not altogether enthusiastic announcement.

BLITZER: Yes, it was not exactly crying when he heard Jim DeMint was leaving. We're talking about Mitch McConnell. Is this good for the Democrats or bad for the Democrats, Donna?

DONNA BRAZILE, CNN CONTRIBUTOR: Well, it's a mixed blessing, I think. I think on one hand he's a wonderful southern gentleman. Everyone likes him personally. But everyone knows that he is to the right of just about everybody else in the United States Senate when it comes to public policy and personnel in terms of going out there and recruiting other conservative Republicans.

It's a perfect match for the Heritage Foundation to have him at the helms. But I think in terms of overall, I don't believe this is going to hurt Senator McConnell at all.

BLITZER: Erick, for the conservative movement out there, will he be more influential, more powerful at the Heritage Foundation than he would have been in the Senate?

ERICKSON: I spoke to one of our mutual friends saying in the past years he's gotten a number of conservatives elected in the Senate, but they haven't stretched their legs largely allowing him to still be the front man.

Without him there, you have Ted Cruz coming as well, you're going to I think see Marco Rubio and Rand Paul and Ted Cruz and Mike Lee and these guys he got into the Senate now feel like they don't have to stand behind DeMint.

On the outside it's not just Heritage Foundation. You have "Heritage Action for America," which Republican members of Congress hate because they score so aggressively on who is conservative or not.

You know, DeMint having done what he did with the Senate conservatives fund, if he doesn't put a chain or leash on "Heritage Action for America," he could be causing more trouble for Republicans and be there a lot longer instead of the four years he'd been if he'd stayed in the Senate.

BLITZER: Let's turn to the fiscal cliff quickly. Donna, listen to what Alan Simpson, the former senator, Simpson Bowles commissioner, he's angry at Tim Geithner, other Democrats for suggesting it's OK to go over the fiscal cliff if the Republicans don't budge. Listen to this.

(BEGIN VIDEO CLIP)

ALAN SIMPSON, FORMER U.S. SENATOR: When you have leaders of parties and people from the administration saying I think it would be to the advantage of the Democrats to go off the cliff, or I think it would be advantage for the Republicans to go off the cliff or the president to go off the cliff, that's like betting your country. There's stupidity involved in that.

(END VIDEO CLIP)

BLITZER: Yes, he's not happy with some of these statements coming from Democrats.

BRAZILE: Well, you know, that's probably misplaced anger. The Democrats have been very clear not just over the last two weeks, but the last two years, unless they extend the Bush tax cuts for 98 percent of Americans, the Democrats will not budge one inch. So the 2 percent, the top 2 percent will have to pay a much higher rate. The Democrats have been very consistent.

BLITZER: Do you think they have been?

FRUM: Right now, all over the country people who are unemployed and unemployed for more than 25 weeks are getting robo calls warning them their benefits will end on December 31st.

In our conversation in Washington, we talk about the fiscal cliff as it were a tax event and only tax event. But the impact on unemployed people will be dramatic. The impact on those Americans who don't pay a lot of income tax, but are benefitting from the extra two points of payroll tax relief, may not be dramatic, but it will be noticeable.

This country could go into a recession. What's going on in this discussion is Richard Nixon's old madman theory, each side trying to persuade the other that it's just crazy enough to blow up the world.

BLITZER: Erick, very quickly, you say it's better to go over the cliff than accept what the president's offered?

ERICKSON: Yes. I absolutely think so. The Republicans unfortunately for people like me are willing to raise taxes to the tune of $800 billion. The Democrats want to argue with them over the mechanism.

And it's the mechanism that would hurt small businesses. The Republican negotiating hand winds up being a little better on the other side. The fiscal cliff is the maximum of what Democrats want.

You've got Howard Dean out there saying we need to raise taxes on everybody, not just the rich. Steny Hoyer says the same thing going back to June. I think the Republicans have a better handle on the other side, but they are willing to sell out on tax increases. It's the Democrats who are in transition on the mechanism.

BLITZER: We're going to have a lot more on this story coming up. Erick, Donna, David, guys, thank you.

Authorities are trying to catch up with technology. In this case, it's all about text messages and finding a way to use them against criminals.

(COMMERCIAL BREAK)

BLITZER: When police are investigating a crime, they can follow a trail of phone calls and e-mails, but texts certainly much harder to track down. But that could change if law enforcement agencies can persuade Congress to act.

There are new developments and Brian Todd is joining us now. What's going on here, Brian?

BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, law enforcement now wants to be able to retrieve our text messages. Not just the so-called meta data, that's, you know, when and to whom you sent text, they want the content and they want our carriers to store it for at least three months. As one prosecutor pointed out to us, these days your text is often where the evidence is.

(BEGIN VIDEOTAPE)

TODD (voice-over): Michelle Medoff says she started getting the harassing texts in early November. An anonymous person threatened to send nude pictures of her to her mother and then to a wide circulation.

One text said I'm so close to sending them to everyone. You are so sexy. You'll be an online star in no time unless you answer me. The threats came from different cell phone numbers. A model and college student, she was terrified.

MICHELLE MEDOFF, TEXT THREAT VICTIM: I was very, very afraid. I mean, that week, I didn't go to a night class because I didn't feel safe to walk by myself.

TODD: It's those kinds of texts that U.S. law enforcement authorities want more power to investigate. Several law enforcement groups including chiefs of police, sheriffs associations, are pushing Congress to pass a law saying your carrier has to record and store your text messages.

It's not clear how long they want them stored. Scott Burns of the National District Attorney's Association, one of the groups pushing for the new law says his group favors a period of three or four months. Maybe longer if an investigation is urgent.

SCOTT BURNS, NATIONAL DISTRICT ATTORNEYS' ASSOCIATION: If you're in the middle of an investigation and bad guys are communicating back and forth whether it's a homicide, whether it's evidence of a crime, it's crucial. I mean, 20 years ago we weren't talking about this. Today everybody has a cell phone, everybody texts and e-mails and is on social media and that's where the evidence is today.

TODD: Or not. As of 2010 major carriers like AT&T, Sprint and T- Mobile didn't retain any content of customers' text messages. They got rid of them immediately. Verizon keeps them only for up to five days.

(on camera): Why can't law enforcement get the texts from individual cell phones? Scott Burns says it's faster and more efficient to get it from the carriers. And he points out that of course the bad guys often erase their incriminating texts.

(voice-over): But many believe the law enforcement benefit of mining texts doesn't outweigh privacy concerns. Chris Calabrese of the ACLU says with some 60 billion text messages sent every day, there's just too much private information that would be stored.

CHRIS CALABRESE, ACLU: And that's not just something law enforcement can get. It's divorce attorneys, it's other investigators, it's the press. Even if you feel like you have nothing to hide, there's a lot of embarrassing and personal information there.

(END VIDEOTAPE)

TODD: Experts point out this does become a security issue. If the carrier store your texts for any length of time, they can be hacked into. We contacted the major wireless carriers to see what they think of this law to store our texts.

Reached out to Verizon, Sprint, AT&T and T-Mobile, none of them would comment. The Wireless Association, the main lobbying arm for those carriers also would not comment -- Wolf.

BLITZER: They never caught that person harassing that model.

TODD: No.

BLITZER: Brian, thank you.

Syria's rebels have pleaded for international intervention, but could be capable of bringing down the regime on their own. What's going on? We'll have the latest.